BCG Transform Index:
Belgium & theNetherlands
Financial study on sector performance
APRIL, 2023

Disclaimer
The basis for this study is a data set extracted from Capital IQ for companies listed on European stock
exchanges with a minimum revenue of €500 million
Companies from the financial industry and Ukraine/Russia are excluded

The analysis covers data from 2018 through the last twelve months (LTM)
LTM refers to available data from Q4-2021 to Q3-2022
The ranking is based on a comparison with other industries within the same region
Please note that the statements made relate specifically to this data set
1Copyright © 2023 by Boston Consulting Group. All rights reserved.

Our data set includes 1,373 European companies, of which 107 are from Belgium or the Netherlands, thatmeet these selection criteria

Most resilient
sectors

Most impacted
sectors

Rankingcompared with
European average
BCG
recommendation•

The Automotive sector demonstrates a remarkable performance across all dimensions, with the highest
score in profitability despite rising input prices, supply chain disruptions, and declining car sales•

The Chemicals sector scores highly across all dimensions, benefitting from the industry's high degree ofdiversification that stems from the wide range of application fields of its products•

The TMT sector performs comparatively poorly in financial stability, but exhibits high scores in profitability
and solvency, with significantly better performance compared with the European ranking•

The Energy sector demonstrates relatively stable solvency, but grapples with issues regarding profitability,
as margins have dropped by more than 50% since 2018, and financial instability due to rising interests•

The Health Care sector struggles primarily in profitability and solvency with significantly lower margins due
to higher input prices and changing consumer needs•

The Industrials sector performs poorly in solvency and financial stability, most likely due to high input andenergy prices for production as well as supply chain disruptions and a looming recession•

The TMT sector in Belgium and the Netherlands has demonstrated greater resilience in the face of industry
challenges such as chip shortages and heightened competition from new digital entrants•

The Health Care sector in Belgium and the Netherlands has been more severely hit by rising input prices andchanging consumer needs, such as the demand for digital engagement

In the context of persistent crises, companies cannot continue to remain in a reactive firefighting mode, butrather must focus on proactively seizing opportunities supported by an adaptable cost structure (that fitsearnings), a strong financial position, and an adjusted go-to-market strategy. In a nutshell: Resilience is key tobeing successful

Source: BCG Analysis, International Trade Administration

Take-aways
Operational view
Post-pandemic, revenue is on the rise
across all sectors except for HealthCare and Leisure & Tourism. However,
EBITDA margins have not yet fully
recovered in some sectors, with themargin in the Energy sector having
halved compared with the 2018baseline

Solvency
After a significant rise in LTM,
the proportion of companies withnegative free cashflow in LTM is 22%,
which is slightly lower than theEuropean average of 27%

Financial stability
Net debt has risen by over 10% in LTM,
with just 37% of it being investment
grade. This share is even worse thanEurope's sobering 45% investmentgrade debt but shows a strong
improvement in historical perspective2Copyright © 2023 by Boston Consulting Group. All rights reserved.

Sector performance and resilience in the face of past andprevailing crises

Automotive, Chemicals and TMT sector proved to be the most resilientindustries — quite a different picture compared to the European view

12
3
4
5

Automotive
Metals & Mining

Chemicals
Chemicals

TMT
EnergyMetals & Mining
Automotive

ConsumerOther

Profitability

Solvency

Financialstability

10

9928

910

928

89421

62

1018

45

615

SUM

Industry position in the European ranking
Note: A ranking was assigned to each industry based on its performance in three dimensions. The detailed ranking methodology can be found in the appendix.
Source: Capital IQ, BCG analysis

3Copyright © 2023 by Boston Consulting Group. All rights reserved.

Points given for industry performance in three dimensions

Industrials is the most severely affected sector, with performance in Belgium
and the Netherlands significantly worse than in the European ranking

678910

Leisure & Tourism
Industrials

OthersHealth Care

EnergyConsumer

Health Care
TMT

Industrials
Leisure & Tourism

Profitability

Solvency

Financialstability

5621334512273121191173111SUM

Industry position in the European ranking
Note: A ranking was assigned to each industry based on its performance in three dimensions. The detailed ranking methodology can be found in the appendix.
Source: Capital IQ, BCG analysis

4Copyright © 2023 by Boston Consulting Group. All rights reserved.

Points given for industry performance in three dimensions

Operational view | Revenues exceed pre-pandemic levels — profitability forsome sectors (esp. Energy, Health Care and L&T) below pre-pandemic average
EBITDA margin in BE & NL in %, 2018 –LTM

22.6%
-2.1%

5.4%
651

618

60

77681
24139
1536542018177
26 13144
11536835

57

2019

Note: LTM = LTM Q3-2022
Source: Capital IQ, BCG Analysis

134
1633

177

17%
14%
44%

299
256

233
1311%

154

638
51

221

186

959

64
27
166

14143
2037

2020

103
28
18112427 17155
1 2296

2021

41

LTM

17%

-18.0%
13%

16%
13%
28%

11%
12%

28%
12%

12%

27%

26%

8%

9%

25%
8%

2020
TMT
Other

Automotive

Chemicals

Health Care

2018
2019
Leisure and Tourism

Consumer

EnergyIndustrials

Metals & Mining, Const. Mat.

14%
15%
16%

14%

19%
9%
26%

11%

11.3%

10.6%

21%
14%
12%
0%
12%

26%
17%
11%

8%

-6%

15%
14%
15%
19%
10%
12%
23%
12%

27%

27%

9%

9%

2021

LTM

5Copyright © 2023 by Boston Consulting Group. All rights reserved.

Revenue in the BE & NL in bn EUR, 2018–LTM

Solvency | 22% of companies in Belgium and the Netherlands have negative FCFin LTM, which is slightly lower than the European average of 27%
Distribution of companies with negative/positive FCF in 2021 and LTM

84%

2021

16%

107
78%

LTM
22%226105624

100%

88%

90%

80%

83%

96%

100%

0%

12%

10%

20%

17%

4%

0%

226

105624

260%

60%

83%

79%

17%

21%

50%
50%

77%
23%

40%

40%

2100%
0%

719

57%

68%

43%

32%

719

71%

84%

29%

16%

683%
17%

6100%
0%

Total

Europeanbenchmark fornegative FCF in LTM
Positive FCF

27%

Automotive

Consumer

Chemicals

EnergyHealth Care

Industrials

Leisure andTourism

Metals &Mining,
Const. Mat.

TMT

Other

48%

28%

28%

31%

21%

29%

16%

32%

22%

16%

Negative FCF

Note: The number of companies within each sector is lower than 5 in Automotive and Leisure and Tourism
Source: Capital IQ, BCG Analysis

6Copyright © 2023 by Boston Consulting Group. All rights reserved.

107

Financial stability | While net debt has risen significantly over the recentyears, overall quality has improved strongly after 2020
Net debt by rating1 in BE & NL in % and bn EUR, 2018–LTM

12.8%
230

259

5.9%

-8.7%
237

12.8%

283

251

289
254

160
151

93
17-7

24

4505518-6-944

316-15

44

14

55%

318

2021

35%

22%

5%

19%

318-2154LTM

289
37%
35%

30%

7265

47

2

12270

31%
211921315045
223

1111140

134

140

326

64%

60%

60%
34%

2018

2019

2020

Automotive

Chemicals

Health Care

Leisure and Tourism

TMT

Consumer

EnergyIndustrials

Metals & Mining, Const. Mat.

Other2018

2019

2020

2021

Investment Grade

Mid-Grade

25%

38%

LTM
Sub-Performing

1. The ratings are based on the Net Debt/EBITDA leverage measure. Debt with a Net Debt/EBITDA ratio below 3.5 is considered investment grade, while debt with a ratio between 3.5 and4.5 is classified as mid-grade. If the ratio exceeds 4.5, it is considered sub-performing debt. If EBITDA is negative, net debt is automatically classified as sub-performing.
7
Source: Capital IQ, BCG Analysis

Copyright © 2023 by Boston Consulting Group. All rights reserved.

Net debt in BE & NL in bn EUR, 2018–LTM

8Copyright © 2023 by Boston Consulting Group. All rights reserved.

Appendix

BackupProfitability

Solvency

Financial stability

Total ranking

The profitability ranking isbased on EBITDA growth
between 2019 and LTM, withthe industry having the lowest
EBITDA growth being assignedthe fewest points (1) and theindustry with strongest EBITDA
growth the most points (10)The solvency ranking is basedon the growth sector's overall
cash account LTM, thepercentage of companies withgrowth in cash LTM, and theinterest coverage ratio, withthe worst overall performanceassigned the fewest points (1point) and the strongest themost points (10)The financial stability
ranking is based on the LTM
equity ratio and net debt rank,which is determined by
the proportion of mid-grade
and sub-performing debt, withthe worst overall performanceassigned the fewest points andthe strongest the most points

Once the points for eachdimension have been
determined, a total ranking
score is calculated by summing
the points of each dimension.
The highest sum of points
indicates the best
performance, the lowest thepoorest performance

9Copyright © 2023 by Boston Consulting Group. All rights reserved.

Ranking methodology

Backup

Number of companies within each industry for Belgium and the Netherlands inthe underlying database

107

26

24
102

56

• Companies listedon European stock
exchange with atleast €500M
revenues

1962
7

Automotive Consumer Chemicals

Source: Capital IQ, BCG Analysis

EnergyHealthCare

Industrials

LeisureandTourism

Metals& Mining,
Const. Mat.

TMT• Financial industry
and companies
from Ukraine andRussia excluded

Other

10Copyright © 2023 by Boston Consulting Group. All rights reserved.

Selection criteria:

Backup

The data set consists of European companies that meet the selection criteria
for this study
1,373
244

105
78

28

39

43

35
2

7 12 3238
16

5632
1255

51 45
21158

138
Total

Count ofcompanies
that meetselectioncriteria

6895

Source: Capital IQ, BCG11Copyright © 2023 by Boston Consulting Group. All rights reserved.

159 164

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